Stagnation

One of the big but little-noticed economic stories of the past few years is the sharp slowdown in US productivity growth. Dean Baker and John Schmitt are on the case; their recent article is definitely worth reading.

Baker and Schmidt argue that the era in which US productivity was surging ahead of productivity in other advanced economies may well be over. I’d add a further point: even before the latest data, tales of the contrast between the dynamic US economy and stagnant Old Europe, while not completely false, were greatly exaggerated.

For example, here’s French GDP per hour worked as a percentage of USGDP per hour worked since 1960. That slight dip toward the end — you can see it if you squint very hard — is all we’re talking about.